Do ObamaCare Exchanges Need Another Coverage Tier?

Come open enrollment period next fall, individuals signing up for coverage under the Affordable Care Act’s exchanges may have a new option: a copper plan.

Plans in this tier, which have been proposed by two lawmaker, would reportedly have lower monthly premiums and higher deductibles, seemingly less costly than the currently-offered gold, silver and bronze plans of the federal exchange. Copper plans would cover about 50% of medical costs with a cap on out-of-pocket payments.

Sen. Mark Begich, (D-Alaska), and Sen. Mark Warner, (D-Va.), both supporters of the president’s 2010 reform law, are behind the new idea. Sen. Warner’s office declined to provide details as the idea is still in the planning stages.

A spokesperson for the Centers for Medicare and Medicaid Services says there is not much more to say beyond what Jay Angoff, head of the Department of Health and Human Services office told the WSJ about the plan: “I’m not sure that requiring people who have insurance to nevertheless pay for 50% of their costs themselves can reasonably be defined as decent coverage.”

Currently the only comparable coverage to what would be a copper plan on the exchange is catastrophic coverage. This plan is available for those under age 30, and is significantly less expensive. Premium costs for the average American for a mid-tier silver plan, pre-subsidy, are about $328 a month.

Subsidies are available under the ACA for those making up to 400% of the federal poverty level—about $45,000 for an individual and $94,000 for a family of four.

Catastrophic plan enrollees have to qualify for a “hardship exemption” proving they can’t afford coverage otherwise. The deductible on the plans is $6,350 for individuals and $12,700 for a family according to Kaiser Permanente.

Paul Howard, director of the Center for Medical Progress at the Manhattan Institute, says introducing a fourth-tier plan on the exchange may be attract younger enrollees.

“This new tier would be subsidy-eligible, bring premiums lower nd be health savings account eligible,” Howard says. “This is fantastic—it allows people to build savings, pay out of pocket and could be attractive to young people and more price-conscious consumers.”

Since open enrollment period began on Oct. 1, 3.3 million Americans have selected plans on both state and federal exchanges. Twenty-five percent of these enrollees are between the much-needed ages of 18 to 34.

Under the ACA, every individual in the country has to have insurance by the end of open enrollment period or they will face a fine of $95 a year or 1% of their annual income for failing to comply.

“This would cut out benefits that people don’t want to pay for, and be a powerful inducement for people sitting on the fence,” he says.

And while the ACA does mandate that every plan cover 10 essential health benefits—from ambulatory services to prescription drug costs—some say a copper plan would go against the law’s main goal. Since the ACA became law, more than 6 million Americans have lost their old plans because they did not meet the law’s new standards.

But to those who believe the copper idea is a step backwards, Howard again touts the power of the young and healthy, who are needed to offset the costs of insuring older and less healthy people.

“You need to not punish the younger and healthier for being young and healthy,” Howard says. “That is one of the problems with the exchange—the added [coverage] mandate benefits certain age groups, but drives up costs for every plan in the market.”